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Alaska-Canada Rail Line Proposal Gets New Life

Apr 25, 2019 | Government, Monitor, Transportation

In February Governor Mike Dunleavy requested a presidential permit to extend an Alaska rail line into Canada, which was followed by a 19-0 vote on Senate Joint Resolution 11 in April in which the senate approved construction of up to 1,000 miles of railroad in Alaska (no state funding will be used for the project). The resolution has not yet passed the house.

While the governor’s request and senate action represent recent steps forward on a proposed rail extension that would connect Alaska’s rail system to Canada, according to Mead Treadwell the idea has been bounced around the tundra in one way or another for decades, as far back as the early 20th century when a combine out of England raised significant funding to back an Alaska/Canada rail line. There was renewed interest during WWII when several transportation projects were under consideration, including the Alcan, which was ultimately the infrastructure option selected at the time. Commissions have been issued, laws passed, land set aside and taken away—all as interest has waxed and waned.

Interest is building again, spearheaded by the Alberta to Alaska Railway Development Corporation (A2A Railway), which was formed following a study by the Van Horn Institute. The study was paid for by the government of Alberta with the purpose to determine the feasibility of moving bitumen (a highly viscous liquid or semi-solid form of petroleum) by rail.

That study found “favorable alignment” between Fort McMurray, Alberta, and Delta Junction and suggested using a rail line to deliver the bitumen to Delta Junction where it would be transferred into TAPS for the remainder of its journey to Valdez.

But why go through Alaska at all? While Alaska is strategically placed for transportation in and out of Asian markets, so is the west coast of British Columbia, Canada.

Treadwell, former lieutenant governor of Alaska and current president of Treadwell Development, explained at a World Trade Center Anchorage Meet & Brief lunch that there’s a strong sentiment against transporting any type of petroleum product through British Columbia. “There’s actually a law pending in Canadian Parliament: it would make it illegal to export oil from the west coast of British Columbia,” Treadwell said. This effectively strands much of the petroleum resource that’s been discovered in Alberta.

A2A Railway has been working on making this Alaska/Canada rail line a reality for years and has already invested tens of millions of dollars in the project, according to Treadwell. “The company has been working with First Nations in Canada, working with landowners here in Alaska, and now is at the point where they’re asking for a presidential permit so they can go to next round of financing and discussions with Asian buyers and Alberta shippers,” he said.

So what’s the plan today?

The railway would run from Alberta through the northeast corner of British Columbia and pass through Yukon Territory before crossing into Alaska. The line would be approximately 1,500 miles (2,400 kilometers) in total. It’s projected to cost approximately $12.6 billion (C$17 billion), of which $2.2 billion (C$3 billion) would be spent in Alaska on construction. Part of those costs in Alaska would include upgrades to current Alaska Railroad infrastructure. The project will be funded through private financing and some money from global sovereign wealth fund institutions.

The Alaska Railroad would apply to the Department of Natural Resources for the land necessary for the Alaska side of the route and would lease those lands to A2A Railway for the “life of the railroad,” approximately one hundred years.

“The railroad has been designed with an eye toward reducing fuel consumption and improving safety,” Treadwell stated. The goal for the entire route is to have a grade average of less than 1 percent and curvature that would not exceed 5 percent.

Instead of the Van Horn Institute study’s proposal to connect to TAPS, the current plan is to use current Alaska Railroad track to transport containers to Southcentral Alaska. Placing bitumen in the pipeline would affect the quality of all oil transported through it if it were intermixed; pushing the bitumen through TAPS in batches is complicated and difficult. “So we think it’s much better to connect to the Alaska Railroad and work with Port MacKenzie,” Treadwell said.

Regarding Port MacKenzie, A2A Railway has “made a proposal to fund the unfunded portion of the rail link to Port MacKenzie and to operate an oil port at Port MacKenzie,” Treadwell explained. The Port MacKenzie Rail Extension project includes constructing 32 miles of rail to connect the port to the Alaska Railroad system.

A2A Railway has also been in discussion with the Port of Alaska, which has spare capacity in terms of container shipping and has been looking for ways to fund critical upgrades and modernization. “Every time we hear about challenges at the Port of Alaska—there’s no challenge more revenue can’t fix,” Treadwell said.

If all goes to plan, pre-feasibility work on the project would wrap up this year, followed by a two-to-four year process to complete permitting and secure financing. Construction would begin in the early 2020s and operation would begin in 2025/2026.

According to Treadwell, it’s been estimated there’s at least $750 billion worth of mineral resources within 100 miles of the proposed corridor. While bitumen out of Alberta may be an initial foundation commodity on the rail line, there’s a wealth of other minerals in Canada and Alaska that could take advantage of the line.

But “this railroad from Alberta can’t do anything unless the goods are further shipped on the Alaska Railroad,” Treadwell said. “It’s very important that we have a strong partnership with the Alaska Railroad, and frankly I believe this project will allow the railroad to better serve Alaska’s resource industry.”

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